Computers and networks in general, and the Internet in particular, have at least partially changed how individuals manage their finances. For instance, an individual with an Internet connection can check balances in checking accounts, savings accounts, credit cards, mortgages, automobile loans, and the like. Additionally, an individual can transfer monies from a first account to a second account with a few keystrokes and mouse clicks.
In addition, individuals can research companies online and make educated decisions regarding which companies to invest in. Still further, individuals can use websites to trade securities, including stocks, mutual funds, index funds, and other financial instruments. For instance, an individual may log onto a website and purchase shares of stock rather than having to use a stock broker. Thus, managing finances has become more efficient with the advent of computing and the Internet.
Financial management is a large component of the economy, accounting for billions of dollars in taxable revenue each year. Many individuals depend upon mutual funds to manage their long-term finances, as mutual funds can diversify their portfolio and are managed by financial experts. Typically, for a certain type of investment, mutual fund managers attempt to maximize possible return while minimizing risk. The balancing of risk and return, however, is undertaken for a general population, and does not take into consideration special circumstances surrounding individual investors. For instance, a mutual fund manager may invest heavily in company A. A particular individual, however, may be employed by company A and may have stock options for company A—accordingly, the individual is already financially tied to company A. Conventionally, if the individual desires to avoid compounded risk, the individual does not invest with the mutual fund manager.